*1 Hamilton, diction review.
1027.
Accordingly, petition we dismiss jurisdiction.
review for lack of
The NORTHWESTERN MUTUAL COMPANY,
LIFE INSURANCE
Plaintiff-Appellee
Douglas WEIHER, G. Defendant-
Appellant.
No. 14-3098. States of Appeals,
United Court
Eighth Circuit.
Submitted: June 2015.
Filed: Dec. *2 Snyder, argued, Minneapolis, D.
Richard MN, Defendant-Appellant. for Salveson, Benjamin argued, Erik T. C. Johnson, brief, MN, Minneapolis, on the Plaintiff-Appellee. for BYE, LOKEN, KELLY, Before Judges. Circuit KELLY, Judge. Circuit Douglas appeals the district Weiher grant summary judgment allow- court’s Insurance ing Northwestern Mutual Life (Northwestern) rescind a dis- Company ability Because we con- policy. was not entitled clude Northwestern re- summary judgment, we reverse and mand.1 Background I. practiced Weiher lived Minnesota dentistry owned in Wisconsin. policies: a disability insurance Unum two disability policy, and a Great-West group (Great-West) Annuity Company Life and 4, 2010, May applied to policy. On in- additional coverage. In his Wei- application, surance agreed that Northwest- specifically her replace his Great-West ern jurisdiction We under 28 U.S.C. 1291. have policy and that he would terminate the Weiher would be over-insured and would days within 90 of the have therefore more incentive to make a application. application date of the claim policy. under the Northwestern noti- any policy warned that could fied rescinding issued be Weiher that it was rescinded the Great-West was not
cancelled. *3 Northwestern an in filed action
Northwestern offered United Weiher disabili- States -District Court for the Dis- ty monthly with a trict of policy claiming prom- benefit Minnesota Weiher’s 20, $8,400. 2010, July On ise to policy before receiv- cancel Great-West was a ing policy, signed misrepresentation an Weiher Amend- that to entitled it re- Application, ment scind supplemented policy. to which Weiher counter-claimed 4,May 2010, application, and amended the breach of parties contract. Both agreed and summary judgment. terminate the moved for Great-West Constru- policy by ing premium promise next date. Weiher’s due The to cancel the Great- Application policy Amendment to West warranty, also warned of as a the district Northwestern’s court rights policy applied rescind the Wisconsin law.2 The district if the court policy Great-West was not found that canceled. Northwestern enti- was did Weiher not cancel the tled to pol- Great-West rescind the under Wisconsin 631.11(3)3 icy. § Statutes because Weiher’s failure to terminate the GreaU-West began Weiher to suffer from increased the risk to Northwestern. The neurological and symptoms autoimmune district judgment court entered in favor of longer practice and could no dentistry appeals. Northwestern. Weiher safely. He submitted claims for disability benefits Unum. Great- II. Discussion investigated claim, West and Unum his Our review of a district court’s decision ultimately determined he totally dis- on summary cross-motions for judgment is abled from his profession, paid de novo. Netherlands Co. v. Main St. claims. LLC, (8th Ingredients, 745 F.3d 912 Weiher also made a claim to Northwest- Cir.2014). Summary judgment appro ern, quickly who he discovered had not priate “if the movant shows that there is policy. terminated his Great-West North- genuine no dispute any as to material fact western then reviewed whether it would and the movant is judgment entitled to have issued the it had a matter of law.” Id. (quoting Fed. known would not cancel the Great- 56(a)). R.Civ.P. policy. West Northwestern determined it would not policy because, have issued the parties on agree appeal view, in its doing so increased the risk that applies. Wisconsin law Accordingly, we Although initially disputed promissory warranty grounds constitutes applied, that Wisconsin law of, it has abandoned for rescission affects insurer's obli- position appeal. on See Freitas v. Weils under, gations an insurance unless it Inc., Fargo Mortg., Home 703 F.3d 438 n. exists at time of the loss and either (8th Cir.2013). 3 increases risk at time of the loss or contributes to the loss. This subsection (3) provides: 3. Section 631.11 apply payment does not failure tender Effect of Failure of Condition or Breach of premium. Promissory Warranty. No failure a con- prior dition to a loss and no breach of a cir state law limits the this Wisconsin law Wisconsin substantive Ins., may which cumstances under an insurer Netherlands diversity action. an insurance See Wis. Stat. the district rescind review “We F.3d 912-13. The district court this case de 631.11.4 law] application [Wisconsin court’s fail pertains which applied Am. Gersham v. deference.” novo without of promis ures of condition and breaches Reading, Co. Cas. PA Cir.2001) (8th (internal sory after an effective quotation warranties omitted). party appeal on place. argues Neither marks construing the district court erred law, the inter Under Wisconsin promise to cancel the Great- contract and of an insurance pretation promissory warranty gov policy as West ques both of a statute are interpretation 631.11(3). Further, neither erned Fox v. de novo. of law reviewed tions failure to can *4 party disputes Weiher’s Soc., 207, Ins. 263 Knights Wis.2d Catholic after policy cel the Great-West occurred (2003). 181, “We must 186-87 665 N.W.2d policy place. in an effective Court, Supreme of [Wis the predict how is war rule, promissory warranty A “[a] follow decisions and we consin] they ranty will continue to be as that facts state court when of the intermediate period, such throughout policy law.” stated evidence of [Wisconsin] are the best (in Co., warranty provides a at that failure of 913 Ins. Netherlands omitted). to a claim under the insurer with a defense quotation marks ternal continuing termed warran policy. —Also law, insurance Under Wisconsin Fox, (emphasis at 190 ty.” 665 N.W.2d rules by the same “governed are contracts omitted) Dictionary). (quoting Black’s Law interpretation gen in govern contract re “Promissory those that warranties are v. Northbrook Corp. eral.” Wis. Label shall not something shall or be quire that Co., 314, 607 & 233 Wis.2d Prop. Cas. takes Id. at policy effect.” done after (2000). 276, other 282 As with N.W.2d omitted) , (quoting comment (emphasis 189 contracts, courts seek “deter Wisconsin 3105); Jury Civil Instruction to Wisconsin to the intent of give mine and effect (“A prom on Ins. 81:14 accord 6 Couch Family Am. Mut. contracting parties.” the in issory warranty is one which Inc., Girl, Am. 268 Wis.2d Ins. Co. v. something shall be stipulates that sured (2004). the lan 73 Where 673 N.W.2d takes ef omitted after done or is unam guage the insurance and has the during its continuance fect and con courts biguous, Wisconsin subsequent.”). Under effect of condition Corp., meaning. Label tract’s literal Wis. of this procedural posture facts and at insurance Although 282. 607 N.W.2d case, say district court erred cannot we be they would policies construed as are promise to cancel construing insured, by a reasonable Wis understood promissory aas the Northwestern interpret consin courts “do subject the restric warranty that was policies provide for risks 631.11(3). §of tions contemplate or under the insurer did not failed Weiher concedes received and for it has not write which and this fail- Girl, cancel his Great-West 673 premium.” Am. N.W.2d promissory or breach misrepresentation failure of condition 4. A rescission based on 631.11(3). governed by § warranty warranty governed or breach of affirmative 631.11(l)(b), on a by § and a rescission based 398 undisputed
ure time of loss. He con- existed Weiher was over-insured however, tends, district court erred at the time the loss. See Wis. Stat. requiring 631.11(3). to meet its Northwestern support argument, As for its his failure to burden to show that cancel first Northwestern relies on its Financial [North- “increased Great-West Underwriting (Underwriting Standards risk at the time of the loss.” western’s] Standards). example, For 681.11(3). See Wis. Stat. “The burden points to Section 626.1.1 of its Underwrit proof company on an insurance seeking Standards, ing provides: which ... rescind insurance contract is clear Financial underwriting is the evaluation convincing evidence as each element of the financial aspects application of an Physicians statute.” Pum Wis. company avoid over-insurance. The Corp., Serv. Ins. Wis.2d is concerned about over-insurance be- (Ct.App.2006). N.W.2d experience cause has shown that it leads matter,- parties As an initial dispute the' to an increase the number of claims against what risk Northwestern insured and an increase in the length of claims. Weiher asserts that the risk Specifically, when applying financial un- “might was that he become disabled and standards, derwriting an underwriter be occupation.” unable to work in his He will key evaluate four variables: earned argues Northwestern has not shown that income, income, worth, unearned net the failure to cancel the *5 and bankruptcy. increased the risk that he become would Northwestern further relies on its under- disabled and to unable work. Northwest- writing standard on Issue and Partic- ern it has concedes not shown that ipation, provides: which actually existence of additional insurance Disability Northwestern Mutual Insur- increased the risk that Weiher would suf- ance coverage designed fer is to give replace a medical condition a that would rise Instead, portion to disability. a the financial Northwestern loss occurs if an contends the risk it Insured against insured becomes disabled and cannot that Weiher would seek and obtain work. An important aspect disability disabil- ity benefits. Part of Northwestern underwriting is determining appro- agrees, was the risk that Weiher would priate portion of the financial loss to suffer a medical condition that rendered insure. It is desirable that the Insured him physically mentally disabled. An- have enough coverage to continue to part, however, other was the risk that he provide necessities the event of dis- would perpetuate disability make and a ability. It is undesirable to allow so argues claim. Northwestern over- much coverage that the Insured is bet- likely insured individual to is more make off, ter financially, after than disability claim, perpetuate a thereby increasing disability. before Such a situation its risk. it tempting highly makes to even moti- people vated to continue receiving bene- It is not to necessary parties’ resolve the fits dispute rather than return to risk, work. This is concerning whether as that costly owners, term is used in to the rest of our includes over- insurance.5 assuming impedes Even and also recovery Northwest- of the short, ern’s risk included the risk of over-insur- insured. over insurance is not ance, Northwestern healthy failed show it was any situation for of our policy 5. The statute does not define risk. do not address wheth- statements likewise risk of over minimize the To
owners. was over-insured thus Mutual limits er Weiher insurance, Northwestern will North- coverage in which we in an increased risk to resulting amount affidavit, any life. Total cover- In an averred on one Seebach western. participate all outside (including any on one life that Northwestern age be allowed coverage) normally will repre- on specifically relied Dr. Weiher’s published Mutual’s exceed Northwestern terminate his sentation that he would limits. His fail- [Great-West] the risk to North- ure do so increased may support North
This evidence
Mutual
western Mutual. Northwestern
it
not have
that would
contention
western’s
Disability In-
would not
issued a
have
it known
had
to Weiher
issued
Policy ... had it known that Dr.
come
the Great-West
would not cancel
Weiher
terminate
[Great-
would not
not whether
question
policy. But
Policy.
(or
not)
Disability
West]
have
would
it known what
had
issued
testimony may be sufficient to
Again, this
whether, af
question
knows now.
agreement
to cancel
that Weiher’s
show
effect,
failure
into
ter the
went
was material
the risk
policy increased
to cancel the
poli
decision to issue the
Northwestern’s
i.e.,
loss,
when Weiher
time of
631.11(3)
§to
cy.
pursuant
But rescission
claim for
made a
disabled and
became
materiality.
finding
turn on a
does not
Furthermore,
2012.6
benefits
631.11(1)(b).
And See-
Wis. Stat.
Cf.
631.11(3)
particular policy,
speaks
unsupported statement
simple and
bach’s
ability
rescind
and an insurer’s
to cancel “increased
failure
tak
general
risks
particular policy,
risk”
to meet Northwest
is insufficient
underwriters
en into consideration
partic
on rescission as to this
ern’s burden
issue certain
deciding
whether to
whole
Pum,
policy. See
Northwestern’s
insufficient
failed to cancel the policy; Northwestern
summary
to show
entitled to
alleges
disputes
otherwise. Such factual
judgment because the evidence does not
Pum,
usually
are
for
questions
jury.
specific
policy at
address the
event,
if a general
any
issue
this case. Even
aver-
which also would have
him with
summary judgment and remand for fur-
coverage.
According-
additional
ther proceedings.
ly,
us,
based on the record before
we con-
clude Northwestern was not
entitled
LOKEN,
Judge,
Circuit
dissenting.
631.11(3).
summary judgment
under
I respectfully dissent.
upon
Based
alternatively
as
Supreme
Wisconsin
controlling
Court’s
de-
it is
serts
allowed to rescind the insurance
*7
cision in Fox v.
Knights
Catholic
631.11(1)(b)
pursuant
be
Soc’y, 263 Wis.2d
7. We likewise decline to consider Weiher's denied summary judg- Weiher’s motion for argument summary judg- that he is entitled to ment. We believe "it would be beneficial for on ment his breach of contract counterclaim. the district court to consider this issue in the Because the district court concluded North- first instance.” Id. properly policy, western had rescinded the Thus, may not while Weiher have defraud-
I. Northwestern, knowingly ed he breached a mid-2009, his from the In with income obligation that was a condition contractual dentistry increasing, Weiher practice of precedent issuing poli- to Northwestern agent independent advised cy. monthly he like increase would provided that would be disability benefits II. existing policy, One by policies. his two un- undisputed It is that Northwestern’s UNUM, $5,000 per month pay with would willingness to a policy provid- issue Weiher totally disabled. The if Weiher became $8,400 monthly disability of ing a benefit other, policy sponsored Life a Great-West poli- unless he terminated the Greah-West Association, would by the American Dental cy upon underwriting was based financial $6,000 agent began pay per month. The coverage standards included limits Northwestern, and Wei- negotiating with percentage based on a of earned income eventually to Northwestern her submitted designed to avoid the risk of overinsu- information returns and other disclos- tax is an imprecise rance. “Overinsurance” current, annual earned income of ing meanings. con- term with different this $271,500 existing disability and the two text, as the Wisconsin Court Appeals advised that it was policies. Northwestern has noted: offering dis- willing to issue a new a situation “overinsurance” refers $8,400 per provid- month ability benefits multiple de- coverages where exist to a pol- terminated ed Weiher gree tempted where the insured is to retain icy. Though preferred thereby trigger the event and insured he wanted the Great-West because coverage pro- the substantial obtain $15,000, signed monthly total benefits pro- ceeds. An clause “overinsurance” stating: To Application an Amendment hibiting coverage such excess serves agree the insurance listed I to terminate public policy by reducing temptation I next due date. by premium below the v. Struebing of such fraud. See Ameri- Life is understand Mutual Co., 487, 493-94, 222 can Ins. 197 Wis. agreement on this not relying (1929). 831, 834 N.W. agree- have without this issued Co., Farm Auto. Ins. Becker State Mut. If ment. listed below (App. 181 Wis.2d N.W.2d premium the next due terminated 1993). type This overinsurance date, or is terminated and later reinstat- risk to insurers: well-recognized ed, as a result of this any policy issued full People know that their income who application may be rescinded and the they stop working after will continue premiums returned. daily may more risks their lives take poli- The Amendment listed Great-West try as hard return will $3,500 cy in the amount with a next illness; injury in- after some work July 11, 2010. The premium due date of *8 dis- existence of a sureds will fake the signed Amendment was false when be- ability exaggerate severity. or its policy was cause the Great-West benefit of disability to 100% closer the benefit $6,000 July premium the 11 had fact and income, greater moral the the earned already pay- paid. been continued hazard. policy ing premiums on the Great-West Am., N. v. Ins. Co. disability a claim for bene- Hall and submitted Life of Cir.2003). (7th 773, paid. fits in which Great-West Co., Langlois prior In Wis. Nat’l failure of a condition to a loss and Life (1963), promissory warranty no breach of a 19 Wis.2d 119 N.W.2d con- of, held if for grounds the Court stitutes rescission or af- Supreme Wisconsin under, misrepresented obligation the fects an insured insurer’s an policy application insurance that his annual insurance it at unless exists the $8,500, income was in fact it was less time of when the loss and either increases the $3,000, misrepresentation than the “mate- risk at the time of the loss or contrib- rially acceptance affected the of to the loss. [insurer’s] utes risk,” recovery this which would defeat III.
under the
even absent
intent to
time,
the
At
deceive
insurer.
that
the
Fox,
In
applied
the insured
for a life
statute,
209.06(1), provided
§
applicable
paid
premi-
insurance policy and
the initial
representation
warranty
that no
or
“shall
application
um. The
stated that
deemed
or
be
material or defeat
avoid the
begin
until
a blood test was
misrepresen-
... unless the matter
completed. The insured was killed in an
warranty
ted or made a
the risk
increased
completing
auto accident before
the blood
or
to the
contributed
loss.”
test.
Appeals
The Wisconsin Court of
“part
631.11(3)
of broad revision to
§
held
trumped
this condi-
laws,”
Legis-
the Wisconsin
tion precedent,
and
therefore
§
lature enacted Wis. Stat.
“to re-
631.11
provided coverage because the insurer
place
previous
section 209.06 of the
stat-
prove
“could not
that the
failure
com-
utes
to expressly bring
and broaden it
plete the blood draw and medical studies
of
failures
condition within the statute.”
contributed to or increased
risk
of
Fox,
provisions
of current 631.11 are relevant here: Supreme The Wisconsin Court unani- (l)(b) Misrepresentation or breach of First, mously examining reversed. warranty. misrepresen- No affirmative § 631.11(3), text of the Court concluded tation, and no breach of an affirmative applies only to conditions subse- warranty, ... negoti- that made in the quent and to or promissory continuing ation or procurement for of an insurance warranties, not precedent to conditions grounds constitutes rescis- that “relate to the attachment of risk and of, sion or affects insurer’s obli- precede policy.... the existence of the under, gations unless, show, Insurers cannot under misrepresentation, person knew or [prece- the failure of such a condition representa- should have known that the dent] increased the risk at the time of the false, tion any was of unless loss or contributed to the loss because risk following applies: Next, yet has attached.” Id. 1. The misrep- insurer relies on the thoroughly legisla- Court examined the resentation warranty or affirmative 631.11, history tive finding misrepresentation or affirmative purpose protect policyholders was both to warranty is either material or made with from “harsh common law doctrines” and to intent to deceive. protect ability “the companies of insurance
2. The misrepresented falsely fact or get they information need to under- warranted contributes to loss. policies.” write purpose Id. 192. One
(3) protect condition the statute insurers Effect failure breach promissory warranty. against No “violations of conditions that would *9 Id., acceptance beginning policy period,” of the risk.” the of the not a preclude § promise Act of ch. “that facts will continue to be quoting June 1150, 1169. throughout policy period.” Sess. Laws “Were stated the 1975 Wis. Id. interim is auto original, to rule that insurance in (emphasis quoting we first upon payment a matically provided Dictionary). Law Black’s Note that the Fox, this would be frustrat "premium,” purpose having in Court concluded that ed, “potential 631.11(3) explained, the because § Court not apply, did did not turn to to 631.11(1)(b) have no incentive fulfill § insureds would to determine whether there as medical examina requirements such misrepresentation a was breach of affir assist insurers with underwrit tions which warranty mative that affected the insurer’s ing.” Rather, Id. obligation. the Court held that there no coverage was because the condi 631.11(3) concluding § did not
After tional In policy never came into existence. to the apply; the Court turned whether effect, § the Court ruled that 631.11 sim required prece- blood test was a condition precedent ply apply does not to a condition coverage: dent minimum, to the existence of a At a is' a condition Whether condition Fox a established that breach of condition the precedent coverage depends on precedent insurability that defines meets the of the contract itself. If language materiality requirements the reliance and get does not then proposed insured 631.11(1)(b). §of required coverage, examination there no for insurance. is IV. Fox, on in Id. at 192. Based the contract reasons, For these the decision in Fox conditional the Court concluded that “the conclusively the establishes that district agreement absolutely makes summary properly granted judgment court coverage until clear that effective Wis. Stat. because required has tak- medical examination § the statute on which Weiher result, “As we place.” en Id. at 193. a opposing summary judgment, relied in must conclude that there was no insurance undisputed on apply does not facts of in effect at time Patrick Fox this case. therefore, died and Wis. Stat. 631.11(3) apply.” does Id. at 631.11(3) addition, in In did case, view, I court agree in Fox this with the district my applies the decision interpretation statute
equally negotiations this case. The be- Weiher, Northwestern, adopted by now urged by and tween and “unpersuasive” because de- above-quoted majority, Amendment particular clear, of “risk” that is Application, pends upon make in the a definition To words Fox, “unreasonably unsupported.” until “that is not effective narrow clear, analysis of the As the Fox makes required Great- [termination 631.11(3) to in includes policy] place.” Like the “risk” referred West has taken being insured and get a blood test both the risk loss promise insured’s Fox, provid- to the the financial risk insurer promise terminate coverage for insured ing risk. prece- condition includes, dent, as a matter of Wis- preclude parties but it did not latter risk policy, consin the “moral hazard” of putting place public from on condi- a risk that the warranty, overinsurance that creates tional basis. If viewed as trigger the in- tempted are insured will be promise was “that facts as stated *10 thereby 2012, many ways sured event and obtain sub Weiher proper had coverage proceeds. stantial See Manzella seek an increase of his disability bene- Co., v. Paul Revere F.2d fits greater based on his income—he could Life Cir.1989) (5th (disability insured’s fail policy terminate the Greab-West ure to disclose another “did not to Northwestern for increased un- benefits increase the risk he would der become here at issue or a second but “affect acceptance policy; keep disabled” did or could the Greab-West person “an policy, risk” because overinsured policy, terminate the Northwestern West, strong Northwestern, has a inducement not to return and apply to Great work”). promise Weiher’s to cancel disability another insurer for increased policy “materially affected benefits upon based his earned income in acceptance Instead, [Northwestern’s] of this risk.” 2012. he chose to continue Langlois, 119 N.W.2d 403. His breach breaching his contractual commitment to Northwestern, of that material promise increased thereby failing satisfy by enlarging risk his monthly disability condition precedent coverage un- beyond Fox, benefit what fi der prevented Northwestern’s from l underwriting nancia coming standards allowed. Fortunately, into existence.- That increased risk existed from the majority preclude mo opinion does not the dis- ment he submitted false Amendment trict court from correctly applying Wiscon- stating he would terminate the Greab- sin law as established in Fox on remand. West due premium date of a impose Rather than additional work on the already paid, court, that had been until he filed district I affirm its correct disability for claims with grant benefits summary both judgment rejecting Wei- Northwestern and in Greab-West 2012. her’s disability claim for benefits. majority construes phrase “in- creases the risk at the time of the loss” in 631.11(3) requiring proof that North-
western would not have issued the policy
based on greater income when he
filed the claim disability benefits in 2012. The court properly district conclud- CRAWFORD, Robert Plaintiff- ed, consistent analysis with the of condi- Appellant Fox, precedent tions in change “This [Weiher’s] income is [He] irrelevant. cre- Carolyn COLVIN, Acting W. binding ated a Commis- and even if Security sioner increased, Social his Admin- income benefits istration, Defendant-Appellee. were nevertheless closer to his earned in- they come than otherwise should have No. 15-1239. Policy.” Thus, been under the even if Appeals, United States 631.11(3) Court applies, question is not Eighth Circuit. whether Northwestern would have issued same 2012 with the Submitted: Sept. 2015. Greab-West still effect but wheth- Filed: Dec. er Weiher’s failure to cancel the Great- West policy increased Northwestern’s risk
in 2012.